In the cluttered marketplace we compete in, I don't think the power (and necessity) of staying in touch can be overemphasized. I learned the lesson again last week--thankfully in a good way. It had been a while since I had heard from one of our clients at PromoterZ and so I sent him an email and invited him to go to lunch. We had a nice chat, I asked for feedback on our service and he had a few suggestions (I'm happy to note that we followed through on them). I ran a new idea we're working on past him. He liked the idea and agreed to let us test it with his customers. Then he mentioned that their franchising operation is taking off (looking for a good franchise opportunity? Check out Entrees Made Easy) and there might be an opportunity for me to tell some of their new franchisees about PromoterZ. Turns out the timing was perfect, and I'm scheduled to present to some of their new franchisees next week on how to turn customers into promoters.

So what did I get for my $30? Our product, PromoterZ, is now better thanks to his feedback, we have a place to test our new concept (more on that in future posts), and I have the opportunity to tell new franchise owners how much PromoterZ has helped Entrees Made Easy. Where else could I have got that kind of return on my money? Thanks Brandon!

They say it costs 5 to 10 times more to sell to new customers than it does to sell more to current customers, and yet what percent of our effort is spent looking for new customers vs. pleasing and staying in touch with our current customers? I was able to take Brandon to lunch, but that is not always geographically possible. A phone call works great. It can be as simple as, "how are things going?" Use technology where you can. Without exception, each time we send out our newsletter we get one or two phone calls from customers--they had been meaning to call but never got around to it until the newsletter arrived in their inbox. Here are a few other ideas:

I was on the road over the weekend and found the stupid business idea of the week--no make that century. Driving on the interstate to Flagstaff, Arizona (beautiful place if you have never been there) and needed to stop for a bio break. Sign on the business establishment's front door: "Our Bathrooms are for Paying Customers Only!"

Now I know exactly where that sign came from. An employee, maybe the manager, maybe even the owner got tired of trying to keep the bathroom clean and seeing people walk in and out without buying anything. Simple conclusion and solution: "No more free loaders! The bathroom is a benefit reserved only for those people that buy! Toilet paper doesn't grow on trees! Let's get a sign up, that will save us some money and some time!" So up goes the sign telling potential customers that they are an annoyance and if they want relief, they've got to pay.

I would love to compete with the guy that made that decision. I'd make my bathrooms glisten and smell of sweet things. I'd hire a teenager to stand outside the bathroom door and hand road-weary travelers a warm towelette to refresh themselves. I'd invest in some big signs on the interstate that say "Come use our sweet smelling bathrooms--absolutely free!" Then I'd sit back and watch my suppliers try to keep up with the demand.

Would some travelers come and go without buying anything? Sure, but I would smile and thank them for using my bathroom. Why? Because I know there is no way they are going to be able to keep my remarkable bathroom a secret. When a person asks how their trip went, they are going to say, "It was long, but we found the greatest place to stop. They actually give you a warm towlette and then they thanked us for using their bathroom--and we didn't even buy anything!" And when it is time to make the return trip, where do you think they are going to stop? At my remarkable sweet-smelling bathroom and chances are this time they are going to buy a tank of gas, a bag of jerky, and a 32 oz soda!

Here is the point, whether your business is on the interstate, the internet or any location in between, the name of the game is traffic. The more people that walk through your door, the more you are going to sell. The best way to build traffic is not to hold free services for ransom. Have you ever seen anyone happy after paying a ransom--even if they get what was promised? No! More likely they feel violated and manipulated. So don't do it! Be the good guy and make more money at the same time. If you've got something free and remarkable you can offer, don't hold it ransom, get it out in front and use it to get more customers to walk through your door then make sure they have a remarkable experience. Soon your sweet-smelling bathroom will be world famous...

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Do you remember your customers on their birthday? On their anniversary? Do you give special notice to recently acquired customers? Promoterz does. Learn more

Jackie Huba from Church of the Customer, cites a study that concludes that customers that feel listened to are more likely to spread positive and unsolicited word of mouth. The study was done by Communispace, a company that creates and manages online communities. Key findings:

•82% of community members said they were more likely to recommend the company's product's than before joining the community.

•54% said they were more inclined to purchase the company's products since joining the community.

Though we've done no studies to prove it, we find the same thing to be true with our PromoterZ clients. Those companies that use the service to ask for customer feedback consistently generate more referrals than those that don't.

So do your customers feel like you are listening? Asking is certainly the first step, but I have personally completed a number of customer surveys and never felt like anyone was listening.

In my mind, the critical step to show you are listening is to respond. Simply acknowledging that you have received their feedback and are considering it will let your customers know that someone really is listening--and they in turn will start talking to others....

That is a quote from Mike Duke, the chief executive of Wal-Mart's international division attempting to explain why Wal-Mart has had it's hat handed to it by Tesco the leading retailer in England. How have they done it? In a nutshell by understanding their customer and giving them what they want when they want it.

According to a recent article in the Wall Street Journal, Tesco has twelve million members in its Clubcard program which gives cardholders discounts in return for their name, address and other personal information. Tesco then actively mines the data they collect to make operational and strategic decisions. It seems to be working. Tesco has 31% of the grocery market in England, nearly double that of Wal-Mart and next year Tesco plans to invade Wal-Mart's home turf by opening stores in California.

When Wal-Mart entered the British market, Tesco turned to its databases and searched out customers that always buy the cheapest item. They identified 300 items that these price-sensitive customers buy most often and lowered the price on those items. The result: customers didn't defect to Wal-Mart.

Every three months, Tesco uses its data to send a packet of coupons to its customers. The packets typically contain three coupons for products the customer buys regularly and three for goods that the customer might like, or that Tesco wants them to try. Fifteen to 20% of all Tesco coupons are redeemed, the typical industry average is just 1 to 2%.

What can a small business that can't afford to put a big loyalty card program like Tesco's into place learn from Tesco? Here are a few things:

Information about your customers is valuable and is worth giving a discount to get. Some of our customers at PromoterZ have wondered if they should give a discount coupon to a customer every time they give feedback. Our position is always the same: yes! The information is invaluable. Where else are you going to get it? Even if every customer gave feedback (which they never will) and got a discount, you would still be in a better position to compete because you would understand your customers better.

Use the information you gather to stay in touch in appropriate ways. Tesco sends out coupons that it knows its customers want to receive. In your efforts to stay in touch with your customers are you sending what your customers want to receive or what you want to send? How can you know what they want to receive? Go back to number 1 and ask them. One of our PromoterZ customers, Sport Clips, uses the system to send first time customers a coupon just in time for the next haircut.

Focusing on understanding customers and meeting their needs is powerful--so powerful it can even beat Wal-Mart!

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The Wall Street Journal recently reported on a couple of entrepreneurs that apparently came up with a better mousetrap--make that pen. For how many hundreds of years have we as human kind been using writing utensils that are straight like a stick? Been a few at least and before that the quill. Then in 1987 Colin Roche, a high school student at the time, gets sent to detention and dreams up a new design for a pen to relieve his writer's cramp (any guesses as to what he was writing 500 times?).

The first prototype was built in his dad's garage (see picture-first prototype on far left) and the company, called PenAgain, did nearly $2 million in sales last year. Now, according to the article, they've been given a shot at the big time--thirty days to prove it will sell in Wal-Mart. If 85% of the 48,000 pens ordered by Wal-Mart and placed in 500 test stores sell during the first thirty days, they are in. If not, they may stay on in some of the trial stores or be completely dropped.

Getting into Wal-Mart is a big deal. They have 138 million customers every week! Competition to get a product into that channel is stiff. According to the chain they see about 10,000 new suppliers every year. Of those only about 2% make it to the trial run stage and that is just the beginning. Suppliers to Wal-Mart have to adhere to strict packaging and shipping requirements, monitor the sales of the product in each store, and drive customers into Wal-Mart to buy the product.

So what is PenAgain planning to do to drive customers into Wal-Mart to buy their pen? Unable to afford print or TV ads they plan to do viral marketing. Over the past several years they have collected an email list of 10,000 customers who regularly buy their pens. Mr. Roche describes them as "people who really want to know what the heck is going on with us."

I hope they succeed. Next time I'm in Wal-Mart I'll look for one of their end caps and drop $3.76 to see how it works both because I'm curious but also because I learned a few things from them:

It is possible to improve everyday things that we take for granted. I'll never look at a pen again the same way. A good paradigm shift.

Though it would be easy to summarize this story by saying, "A kid came up with a new kind of pen while in high school detention and now it is selling in Wal-Mart," the fact is a lot more than just a better mousetrap has gone into their success so far. The article doesn't say how many small retailers they work with, but $2 million in sales is a lot of pens and I'm betting a lot of retailers. That's a lot of selling to get to this point.

It doesn't matter what kind of business you are in, building a database or list of customers that want to know "what the heck is going on" with your business is vitally important. The world may not beat a path to your door if you build a better mousetrap, but your loyal customers will if you have a way to let them know. I checked out PenAgain's website, you can join their mailing list right on their front page.

Public relations efforts do work. PenAgain is doing something right as far as PR goes. I was impressed they were in the Wall Street Journal, then I took a look at their site. They've been in Newsweek, Wired, Entrepreneur, and San Jose Mercury News just to name a few. Whatever they are doing, it works and their odds of selling 48,000 in the next 30 days is going up.

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Do you remember your customers on their birthday? On their anniversary? Do you give special notice to recently acquired customers? Promoterz does. Learn more

We search the business blog world looking for posts that illustrate principles, or "Seeds", that if followed, or "planted", will help small businesses grow. We list them here for your convenience. Enjoy.